How Prince AlWaleed Won Big Time in Africa

In 2003, prince AlWaleed made a surprising announcement. While the rest of the world was looking at tech stocks, housing booms and Asian growth opportunities, AlWaleed announced he was going to Africa. And he was going big.

It was a shocking idea. Almost no major investors were in Africa at that time. Africa was “stagnant”. Africa had political problems. Africa was the “lost continent”. The investor sentiment at that time could not have been more negative.

But Waleed is the world’s first global value investor. And he has, like most master value investors, a finely- tuned radar for when market sentiment is wrong or overly pessimistic. And Africa looked like a continent-sized mispriced value play.

In 2003, Waleed had already been doing deals in Africa for almost 8 years. He had been on the ground and met with leading companies and government officials in virtually every country. He knew what the economic fundamentals actually were.

And the truth was that only a few African countries actually had political or other problems. The other countries had attractive growing economies. But the West was painting the entire continent with a general anti-Africa bias.

In short, Africa had good assets and they were seriously mispriced. It was a continent-wide investment opportunity almost perfectly suited for Waleed’s style of emerging market value investing.

So in coordination with Zephyr Management, Waleed launched one of the first pan-Africa private equity firms. It was a growth equity vehicle targeting the entire continent. And he built into this vehicle unique strengths. Through a Western partnership, it had deep PE expertise from day one. Through his network, it had access to international capital (Africa was capital poor at that time). And because of its founder, it had a unique reputation (who you are matters when doing deals in Africa).

It was the classic Waleed value- added approach – target a large and mispriced opportunity with a vehicle that has tremendous advantages. Fast-forward to today and Kingdom Africa Management is one of the leading private equity firms on the continent.

Investors have since woken up to the Africa opportunity. Private equity and hedge fund managers now routinely travel to the continent and report back about the quality assets they find there. Last year, the Carlyle Group and even far away Brazilian BTG Pactual announced new Africa- focused funds ($500M and $1B respectively).

But Waleed got there first. And in retrospect, the Africa opportunity is arguably one of the greatest stories in value investing. How often is an entire continent mispriced?

This month we spoke to Kofi Buckner, Managing Partner of Kingdom Africa Management, about his experiences over the past 9 years. We asked him about a few of his deals, where he sees Africa today and where he thinks the next opportunities will be.